Your consulting firm will produce cash flows of $100,000 this year, and you expect cash flow to

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Your consulting firm will produce cash flows of $100,000 this year, and you expect cash flow to keep pace with any increase in the general level of prices. The interest rate currently is 6%, and you anticipate inflation of about 2%.

a. What is the present value of your firm's cash flows for years I through 5?

b. How would your answer to (a) change if you anticipated no growth in cash flow?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Question Posted: Jun 30, 2016 09:11 AM

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Your consulting firm will produce cash flows of $100,000 this year, and you expect cash flow to

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a The real interest rate is 106102 1 392 Therefore the p...View the full answer

Fundamentals of Corporate Finance

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